Walkthrough: Setting Up and Invoicing Prepayments

Prepayments are payments that are invoiced and posted to a sales or purchase prepayment order before final invoicing. You may require a deposit before you manufacture items to order, or you may require payment before you ship items to a customer. You use the prepayments functionality in Microsoft Dynamics NAV to invoice and collect deposits that are required from customers or remit deposits to vendors. Thus, you can make sure that all payments are posted against an invoice.

Prepayment requirements can be defined for a customer or vendor for all items or selected items. After you complete the required setup, you can generate prepayment invoices from sales and purchase orders for the calculated prepayment amount. You can change the default amounts on the invoice as needed. For example, you can send additional prepayment invoices if additional items are added to the order.

Roles

Phyllis is an accounting manager. She makes decisions about which customers are required to pay a deposit before items are manufactured or shipped. Phyllis sets up Microsoft Dynamics NAV to calculate prepayments automatically.

Susan is a sales order processor. When a customer calls to place an order, she enters the order into the system while the customer is on the telephone. This way, she can verify prices and payment terms with the customer immediately, and she can make adjustments to the order while she negotiates with the customer.

Arnie works in the Accounts Receivable department, where he posts invoices and payments.

In this scenario, Phyllis sets up prepayment requirements for the customer Selangorian, based on their credit history, and gives Susan instructions for how to handle their orders.

When the customer calls, Susan negotiates with the customer until they reach an agreement. She can then choose to calculate the prepayment in several different ways.

After Susan sends the prepayment invoice, the customer orders an extra item. Susan updates the order and creates a second prepayment invoice.

Arnie registers the customer's payment and applies it to the invoices, and then sends the final invoice.

To set up number series for prepayments

Verify that the number series for posted prepayment invoices in the Posted Prepmt. Inv. Nos. field is the same as for posted sales invoices (Posted Invoice Nos.) and the number series for posted prepayment credit memos (Posted Prepmt. Cr. Memo Nos.) is the same as for posted credit memos (Posted Credit Memo Nos.).

To block shipments for unpaid prepayment

In the Sales & Receivables Setup window, on the General FastTab, select the Check Prepayment when Posting field.

When the Check Prepayment when Posting field is selected, you cannot ship or invoice an order that has an unpaid prepayment amount.

Close the Sales & Receivables Setup window.

By default, Phyllis requires customer 20000 to be invoiced for a 30% down payment on all orders. Therefore, she will enter a default prepayment percentage on the customer card.

Phyllis requires all customers to be invoiced a 20% deposit for item 1100. Customer 20000 has a poor payment history. Therefore, she requires a 40% prepayment from customer 20000 for item 1100. The following procedure illustrates how to set up default prepayment percentages.

To assign default prepayment percentages to customers and items

In the Search box, enter Customers, and then choose the related link.

Select the line with customer 20000 (Selangorian), and then, on the Home tab, in the Manage group, choose Edit.

On the customer card for customer 20000, expand the Invoicing FastTab.

In the Prepayment % field, type 30.

Choose the OK button to close the customer card.

In the Search box, enter Items, and then choose the related link.

Select the line with item 1100, and then, on the Home tab, in the Manage group, choose Edit.

On the item card, on the Navigate tab, in the Sales group, choose Prepayment Percentages.

Fill in two lines in the Sales Prepayment Percentages window as follows.

Sales Type

Sales Code

Item No.

Prepayment %

Customer

20000

1100

40

All Customers

1100

20

Important

Depending on your country/region, you must also specify a tax group code on the Invoicing FastTab for items 1000 and 1100.

Close all windows.

To specify an account for sales prepayments in general posting setup

In the Search box, enter General Posting Setup, and then choose the related link.

Select the line where the Gen. Bus. Posting Group field is set to EXPORT, and the Gen. Prod. Posting Group field is set to RETAIL, and then, on the Home tab, in the Manage group, choose Edit.

In the General Posting Setup Card window, on the Sales FastTab, in the Sales Prepayments Account field, specify the relevant account.

In the following scenario, Susan, the order processor, creates an order when talking to a customer. The items that the customer orders require a prepayment, and the customer has made some late payments in the past. Therefore, Susan has been instructed to require a fixed amount of 2,000 as a prepayment on the order.

The customer requests to be able to pay 35%, to which Susan can agree. Therefore, she changes the order.

Susan creates the prepayment invoice and sends it to the customer.

To create a sales order with a prepayment

In the Search box, enter Sales Orders, and then choose the related link.

On the Home tab, choose New.

On the new sales order, press Enter and an order number is automatically assigned to the order.

In the Sell-to Customer No. field, select 20000.

Accept the overdue balance warning that is displayed.

When you press Enter in the Sell-to Customer No. field, most fields on the sales order are filled in automatically.

Fill in two sales lines with the following information.

Type

No.

Quantity

Item

1000

1

Item

1100

1

By default, the prepayment fields on the sales line are hidden, so you must display them.

On Lines FastTab, on the toolbar, choose Actions, and then choose Choose Columns.

The following day, the customer calls Susan and makes changes to the order. The customer wants two of item 1100. Susan reopens and updates the order, and then she creates a second prepayment invoice on the order and sends it to the customer.

To create an additional prepayment invoice

On the sales order, on the Actions tab, in the Release group, choose Reopen.

On the line for item 1100, in the Quantity field, enter 2.

Scroll to see the prepayment fields. The Prepayment Line Amount Excl. VAT field now contains 630, and the Prepmt. Amt. Inv. Excl. VAT field contains 315. This shows that there is an additional prepayment amount that has not been invoiced yet.

To post an invoice for the additional prepayment amount, on the Actions tab, in the Posting group, choose Prepayment, and then choose Post Prepayment Invoice.

This walkthrough has taken you through steps to set up Microsoft Dynamics NAV to handle prepayments. You have set up default prepayment percentages on customers and items, and you have also used different methods to calculate the prepayments on an order. You have tried to assign one total prepayment amount to the order, and you have had the prepayment amount calculated as a percentage of the whole order.

You have also posted a prepayment invoice, created a second prepayment invoice when the order has changed, and posted the final invoice for the remaining amount.

The prepayments functionality in Microsoft Dynamics NAV makes it easy to set up and enforce prepayment rules for customers and items, and it enables you to post every payment against an invoice.